Jan, 13, 2017

States are Positioning for Role in Health Care Debate

Dan Meuse

On December 2, 2016, House Majority Leader Kevin McCarthy (R-CA) and other members of House leadership sent a letter to Governors and State Insurance Commissioners seeking input on the repeal and replacement of the Affordable Care Act (ACA). The letter asked for feedback in nine specific areas:

  • State policy flexibility to expand choices and lower premiums
  • Federal action to stabilize the individual, small group and large group markets
  • Changes that could reduce costs and improve outcomes in Medicaid
  • How to preserve employer-sponsored insurance and reduce its costs
  • Long-term reforms to improve affordability
  • How states might use Section 1332 waivers
  • Whether a state would be interested in a high-risk pool
  • Timing and deadlines that could impact, or be impacted by, legislative action
  • Whether states codified ACA reforms into state laws

Governors began responding to the letter quickly. Predictably, the tone and content of responses varied based on individual state dynamics and the extent to which ACA reforms, and most notably the option to expand Medicaid, were embraced by a state. One of the first states to respond was Washington, where Democratic Governor Jay Inslee highlighted the value of the ACA in his state. He warned Congress to “first do no harm.” The tone was quite different from Florida Governor Rick Scott (R) who called the impact of the ACA “devastating” and demanded its immediate repeal and replacement.

Throughout the responses, there are common themes that speak to the integral role of states in the debate about the future of health care legislation that will dramatically impact states and their residents. First, given the unique structures of health care markets in states, many governors expressed a desire for more flexibility in setting policy in their individual markets. Some governors also expressed a desire for more flexibility in their Medicaid programs, seeking relief from some of the beneficiary protections that the federal government has put in place.

But for some governors, flexibility alone isn’t the solution – some governors expressed concern about maintaining coverage support through the ACA’s tax credits and Medicaid expansion. Others spoke more generally about financial support for insurance and supporting the state investments in technology infrastructure.

Certain aspects of the ACA were mentioned frequently. Among them were Essential Health Benefits. Governors expressed a desire for states to make more of a decision on what must be included in coverage for sale. Prior to the ACA, benefits mandates were set by states. Some states required rich plans with a number of additional benefits including infertility treatments and coverage for autism therapies. Other states included very few benefits, with some even allowing plans to exclude care for maternity and newborns. The ACA brought all benefits up to a standard minimum level and relied on states to choose the exact suite of benefits for their market.

Also mentioned by governors were the rules governing the rates that insurers can charge for premiums in the individual market. While the ACA limits the variation in rate by age to 3:1 (the most expensive premium cannot be more than three times the least expensive premium) and the variation from tobacco use to 1. 5:1, governors expressed a desire to relax these bands and allow states to set their own ratios. Some governors also expressed a desire to allow insurers to change rates based on health status, a practice that will increase premiums for those with pre-existing conditions.

While the variation in state responses is expected, the clear message is that states have a critical role to play in carrying out reforms and need a seat at the table to thoughtfully inform a path forward. Every state saw a drop in its uninsured rate since the ACA was passed and governors will be sensitive to policies that could result in a loss of coverage and financial burdens on health care system. Additionally, federal policies can have immediate and long-term impacts on state budgets, both positive and negative, which is always on the minds of the nation’s governors. The list below provides links to the responses from governors and will continue to be updated as more responses are made public.